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Insurance Buyers Facing Mixed Market for 2013

October 17, 2012 Comments off

Insurance Buyers Facing Mixed Market for 2013
Source: Willis

Willis Group Holdings (NYSE: WSH), the global insurance broker, expects insurance buyers will see a mix of rising and falling commercial Property/Casualty rates in 2013 as they face a complex marketplace that continues to defy the standard hard/soft market cycle. Modest rate increases in Casualty, Executive Risks and several specialty lines will be balanced by declining rates for non-catastrophe-exposed Property programs and other risk areas, according to Willis’ 2013 Marketplace Realities report. The annual report, published today, serves as a guide for North American insurance buyers preparing for upcoming November, December and January insurance program renewals.

For the Property insurance market, 2012 has been a year of recovery from record-setting losses in 2011, but predictions of a hard market have not been borne out. Abundant capacity, low underwriting losses and the lingering weak economy are creating a flat marketplace. Insurance buyers with catastrophe (CAT)-exposed Property risks can expect flat renewals, while buyers with non-CAT exposed risks will experience decreases in the 5-10% range. Casualty lines are experiencing some upward movement and General Liability buyers are facing rate increases in the 3-7.5% range, with Excess rate increases running a higher on some programs. Price firming is expected to continue into 2013 for some specialty risks, including primary Directors & Officers Liability, Employment Practices Liability and some segments of Construction, according to Willis experts.

In the employee benefits space, employers are focused on elements of the health care reform law that will go into effect in the next few years. The cost of health insurance continues to rise as insurers pass down the cost of compliance, while organizations take aggressive steps to stem rising costs. Rate increase estimates for 2013 can be expected to approach 10%, according to Willis experts.

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